India's stock markets have plunged sharply, largely on worries increasing oil prices will hurt the country's fast-growing economy. Anjana Pasricha reports from New Delhi, the Indian stock markets have been falling since worries rose about a slowdown in the U.S. economy earlier this year.

The Mumbai stock index, the Sensex, tumbled by 4.5 percent soon after trading opened. It recovered somewhat later, but had lost more than three percent by the end of the day, closing at 15,066 points.

The Indian stock market was the hardest hit compared to other Asian markets such as Japan, and Singapore, which also recorded losses.

Analysts say the latest surge in prices of crude oil, which topped $138 a barrel last week, has raised worries that India's economy could be hit harder than estimated. India imports three quarters of its oil, and its state-owned oil companies have been losing billions of dollars since oil prices began climbing.

But high oil prices are not the only factor affecting the Sensex, which has lost about 23 percent of its value since the start of the year.

Rajesh Jain, at Pranav Securities in Mumbai, says the steep stock-market decline has been driven by heavy selling by foreign institutional investors or FII's.

"Holdings are concentrated in the hands of large FII's who sell any quantity on a single day," said Jain. "To absorb that kind of quantity you may not have ready buyers at all times, and both long-term buyers and speculators are absent from the market."

The foreign investors have pulled approximately $5 billion from the Indian stock markets this year. They began pulling out earlier this year amid concerns that a slowdown in the U.S. economy will adversely impact emerging economies such as India.

Those worries have been intensified by the relentless rise in crude oil prices and high domestic inflation.